Dodgers hit with majors' second-largest tax bill

The Dodgers owe Major League Baseball $11.4 million by Jan. 21 for surpassing the league's luxury-tax threshold for player payroll this season, the Associated Press reported Tuesday.

That's the second-highest figure in baseball, behind only the New York Yankees, who owe $28 million for exceeding the $178-million maximum.

It's the first time the Dodgers have had to pay the tax since it was instituted in 2003. Only five teams -- the Angels, Boston Red Sox and Detroit Tigers being the others -- have had to pay it at any time, and the Yankees have been responsible for the vast majority of the charges.

Only the Yankees and Dodgers are being charged this season. Boston came within a quarter-million of passing the threshold.

The number calculated for the tax counts all players on the 40-man roster and includes average annual contract value, earned incentives and cash adjustments in trades -- and $10.8 million of paid benefits per team.

Per that figure, the Dodgers actually had the highest payroll in the majors at $243 million. But because they stayed free of tax territory in 2012, they are only charged at a rate of 17.5 percent this offseason.

If they were charged at the Yankees' rate, they'd owe $32.5 million this year alone, enough to pay the salary of any player in the majors this season. The luxury-tax threshold jumps to $189 million for the next three seasons, but the Dodgers are likely to pay again next year. If they surpass that number, they'll be charged 30 percent of how much they exceed it by, and 40 percent the next season and 50 percent the season after that.

That's why the Yankees pay so much, and why New York is desperately trying to get under the threshold in the offseason. If a team avoids the tax for just one season, the rate resets to 17.5 percent.

The Dodgers' functional payroll in 2013, not for tax purposes, was $236.9 million, just a smidgen below the Yankees' $237 million.

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